Following today's spring budget from Chancellor Jeremy Hunt, industry experts in the fashion and retail space have suggested that the support offered is minimal to non-existent.
In brief, here are the main points from Chancellor Jeremy Hunt’s Budget statement in the House of Commons:
- The Office for Budget Responsibility (OBR) now forecasts that the UK will not enter a technical recession this year and that the Government “will meet the Prime Minister’s priorities to halve inflation, reduce debt and get the economy growing”.
- Despite “continuing global instability”, the OBR expects inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023.
- The energy price guarantee will be extended for another three months.
- Fuel duty will remain frozen and a 5p reduction will be maintained for a further year.
- The planned increase in corporation tax to 25% will be going ahead, but a new policy was announced for “full capital expensing” over the next three years, which will mean every pound invested in IT equipment, plant, or machinery can be deducted immediately from profits.
- Introducing a new tax credit for small and medium-sized businesses that spend 40% of their expenditure on research and development.
- There will be 12 new investment zones, and they will potentially be in the West Midlands, Greater Manchester, the North East, South Yorkshire, West Yorkshire, East Midlands, Teesside and Liverpool. There will also be at least one in each of Scotland, Wales and Northern Ireland.
- An annual £1 million prize for AI research over the next 10 years, called the “Manchester Prize”.
Responding to the budget, retail experts spoke to TheIndustry.fashion:
Kay Buxton, Chief Executive of Marble Arch London BID, said:
“Shopping accounts for 46% of all tourist spending, with 54% being spent on hotels, eating out, and visitor attractions so it is frustrating that the Chancellor has again ignored widespread calls to reintroduce tax-free shopping for international visitors.
“Independent research suggests that reintroducing tax-free shopping would have led to an extra £2.1bn being spent on shopping by overseas visitors, as well as £1bn on hotels, restaurants, and visitor attractions. The removal of tax-free shopping has damaged the international appeal of the UK for visitors, so this is another missed opportunity by the Chancellor, which would have provided a much-welcomed boost for the UK visitor economy.”
Helen Dickinson, Chief Executive of the British Retail Consortium, said:
“In the face of volatile demand caused by high inflation and low consumer confidence, measures to support households with the cost of living, such as the ongoing energy bill support and changes to childcare costs, are welcomed. However, many businesses are weighed down by a myriad of higher costs right through the supply chain. Government must do more to limit one of the biggest drags to retail investment, which is oncoming regulatory burdens heading down the track, or risk a crash in business investment and further inflationary pressures.
“The Chancellor understands the need to train people to re-enter the workforce, yet he missed a key opportunity to fix the issues with the Apprenticeship Levy system that would support this very goal. Over the last three years, businesses have lost £3.5bn in unused Levy funds. To break this cycle of wasted investment, it is vital that Government allows businesses to use their hard-earned Levy funds for a wider array of skills courses.
“The broken Business Rates system remains a drag on business investment, jobs, and economic growth. Rates must be paid in full whether firms are making a profit or a loss. This makes Business Rates the final nail in the coffin for many struggling stores; shutting shops, costing jobs and preventing new stores openings. The Chancellor should make good on the Conservative 2019 pledge to reform Rates and lay out a clear roadmap for future reforms.”
Alan Thomas, UK CEO at Simply Business, said:
“Small business owners are particularly vulnerable at the moment, and the Spring Budget is seen by many small business owners as an opportunity for the government to express its support for SMEs and the self-employed - a community which represents one of the most important contributors to the UK economy.
“While important measures have been put in place, such as an increase in the Annual Investment Allowance to £1m and offering greater support in terms of childcare provisions, the fear remains that these new measures will only scratch the surface. The cost of energy is front of mind for the majority of small businesses, with over half (54%) saying this is the single greatest threat to their business in 2023. The 3-month continuation of the Energy Price Guarantee will be welcome news, but SMEs up and down the country will still have very real concerns as to what comes after that.
“Our research indicates that over a quarter (26%) believe that they, quite frankly, will not be able to pay their bills in 2023. Despite the positive measures introduced, the worry is that many small businesses will not have seen these fears fully extinguished. Accounting for over 99% of all British businesses and 48% of employment, our economy’s recovery is directly linked to SMEs prosperity, and we hope their continued support will present a win-win situation for UK SMEs and the Chancellor's aspirations for economic growth.”
John Webber, Head of Business Rates at Colliers, said:
“The Government’s lack of comment on Business Rates in its Budget today is desperately disappointing- with no reassurance that it has engaged with the industry -despite the fact the new 2023 Revaluation list becomes live in two weeks’ time.
“Business rates retentions are often a hospital pass - the local authorities are given more authority to spend funds raised - but the amount of money raised never fills the gap between what is raised and what is needed. Sometimes retention can be a real negative to the local authority with the impact of appeals and the risk of losses.
“The Chancellor spoke of creating a tax regime pro-business, that would be the envy of Europe. Yet the failure to reduce the multiplier fundamentally means business rates for retail and other sectors will rise from 2024 with inflation. This is the first time a new list will start with a multiplier over 50p. Nowhere else in Europe do businesses pay half the rental of their premises in property taxes and at current levels this is unsustainable and deters new investment in businesses, despite the Chancellor’s claims.
“This is a damning indictment for the Conservative Government who have failed their manifesto promise to reduce this tax.”